HKMA announced that, in accordance with the Banking (Capital) Rules, the countercyclical capital buffer (CCyB) ratio for Hong Kong remains at 2.5%. This is mainly because system-wide risks in Hong Kong associated with a period of excessive credit growth have not subsided and the housing affordability remains highly stretched.
The specific CCyB requirement applicable to a given authorized institution is expressed as a percentage of its common equity tier 1 capital to its total risk-weighted assets (RWA). CCyB requirement of each authorized institution may vary, depending on the geographic mix of its private-sector credit exposures and the CCyB rate applicable in each jurisdiction where it has such exposures. The latest indicative buffer guide, calculated based on data from the fourth quarter of 2018, signals a lower CCyB of 0.75%, mostly due to the recent narrowing of the property price to rental gap from more than 10% in the previous quarter to slightly below 3%, partly reflecting the correction in the residential property prices after mid-2018. The credit-to-GDP gap, however, remains at a significantly elevated level of over 12%. In addition to the indicative buffer guide, HKMA reviewed a range of reference indicators such as measures of bank, corporate, and household leverage; debt-servicing capacity; profitability and funding conditions in the banking sector; and macroeconomic imbalances.
Keywords: Asia Pacific, Hong Kong, Banking, CCyB, Basel III, Regulatory Capital, HKMA
Previous ArticleIAIS Publishes Newsletter for Summer 2019
Next ArticleIFRS Releases Taxonomy Formula Linkbase 2019
HKMA has published a circular that sets out the regulatory and reporting treatment for loans that participating authorized institutions may grant to eligible borrowers under the 100% Personal Loan Guarantee Scheme.
ECB published the results of the assessment of internal models that banks use to calculate risk-weighted assets for credit, market, and counterparty credit risks.
PRA published a statement on the regulatory treatment of retail residential mortgage loans under the Mortgage Guarantee Scheme, or MGS.
FCA is consulting, via CP21/7, on the second phase of proposed rules to introduce the UK Investment Firm Prudential Regime (IFPR).
HM Treasury and BoE announced the joint creation of a Central Bank Digital Currency (CBDC) Taskforce to coordinate the exploration of a potential central bank digital currency in UK.
EIOPA published an opinion to set out its expectations on the supervision of the integration of climate change risk scenarios by insurers in their Own Risk and Solvency Assessment (ORSA).
Bundesbank published two circulars on AnaCredit reporting requirements. Circular 27/2021 covers changes to the reporting of branches, additional attributes to be reported for investment funds from August 01, 2021, and updates to the list of international organizations.
EC published the Implementing Regulation 2021/622 that lays down implementing technical standards for reporting of the minimum requirement for own funds and eligible liabilities (MREL).
BCBS has set out the strategic work priorities, as part of its the work program for 2021-22.
PRA published the policy statement PS8/21, which contains the final supervisory statement SS3/21 on the PRA approach to supervision of the new and growing non-systemic banks in UK.